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TEST-8 EXPLANATION PDF

October 6th, 2019

Lesson 14
National and International
Institutions
National and International Institutions ................... 2
National Institutions ............................................ 2
NITI Aayog (National Institution for
Transforming India) .......................................... 2
Reserve Bank of India ....................................... 2
Securities and Exchange Board of India ........... 4
Pension Fund Regulatory & Development
Authority ........................................................... 4
Insurance Regulatory and Development
Authority ........................................................... 5
Financial Stability and Development Council ... 6
National Bank for Agriculture and Rural
Development .................................................... 7
Small Industries Development Bank of India ... 8
National Housing Bank ..................................... 8
EXIM Bank ......................................................... 9
Goods & Services Tax Council ......................... 10
National Payments Corporation of India ........ 11
Quality Council of India .................................. 11
District Mineral Foundation ........................... 12
International Institutions ................................... 13
World Bank ..................................................... 13
International Monetary Fund ......................... 14
Asian Development Bank................................ 16
Asian Infrastructure Investment Bank ............ 16
New Development Bank ................................. 17
World Trade Organisation .............................. 18
World Economic Forum .................................. 19
MCQs for Practice .................................................. 21
MCQs with Answer & Explanation ......................... 22

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 ▪ To evolve a shared vision of national
NATIONAL AND development priorities, sectors and strategies
INTERNATIONAL ▪
with the active involvement of States.
To foster cooperative federalism through
INSTITUTIONS structured support initiatives and mechanisms
with the States on a continuous basis,
recognizing that strong States make a strong
NATIONAL INSTITUTIONS nation.
▪ To develop mechanisms to formulate credible
plans at the village level and aggregate these
progressively at higher levels of government.
NITI AAYOG (NATIONAL INSTITUTION ▪ To ensure, on areas that are specifically referred
FOR TRANSFORMING INDIA) to it, that the interests of national security are
incorporated in economic strategy and policy.
▪ NITI Aayog was set up following the
▪ To pay special attention to the sections of our
announcement made by Prime Minister Shri
society that may be at risk of not benefiting
Narendra Modi during his Independence Day
adequately from economic progress.
Message on 15 August 2014.
▪ To design strategic and long term policy and
▪ It has been established as a replacement for the
programme frameworks and initiatives, and
Planning Commission to provide Governments at
monitor their progress and their efficacy. The
the central and state levels with relevant
lessons learnt through monitoring and feedback
strategic, directional and technical advice across
will be used for making innovative
the spectrum of key elements of policy /
improvements, including necessary mid-course
development process (eg. special attention to
corrections.
marginalized sections who may be at risk of not
▪ To provide advice and encourage partnerships
benefitting adequately from economic progress,
between key stakeholders and national and
on technology upgradation and capacity building
international like-minded Think tanks, as well as
etc.) In addition, the NITI Aayog will monitor and
educational and policy research institutions.
evaluate the implementation of programmes.
▪ To create a knowledge, innovation and
▪ The NITI Aayog also seeks to foster better Inter-
entrepreneurial support system through a
Ministry coordination and better Centre-State
collaborative community of national and
coordination.
international experts, practitioners and other
▪ NITI Aayog is Planning Commission with
partners.
expanded scope but without its financial powers.
▪ To offer a platform for resolution of inter-
The financial powers like setting sectoral
sectoral and inter- departmental issues in order
priorities, designing the schemes and
to accelerate the implementation of the
programmes, estimating the entitlements to
development agenda.
State development programmes (other than
▪ To maintain a state-of-the-art Resource Centre,
devolution), and influencing the annual
be a repository of research on good governance
allocations as per the priorities etc. now come
and best practices in sustainable and equitable
under direct influence of the Ministry of Finance,
development as well as help their dissemination
Budget Division / Dept of Expenditure.
to stake-holders.
▪ Like planning commission NITI Aayog lacks a legal
▪ To actively monitor and evaluate the
support or any constitutional foundation.
implementation of programmes and initiatives,
▪ Like Planning Commission, NITI Aayog is chaired
including the identification of the needed
by the Prime Minister. For all practical purposes
resources so as to strengthen the probability of
a Vice Chairman in the rank of a Cabinet Minister
success and scope of delivery.
(equivalent to Dy Chairman, Planning
Commission) and a Chief Executive Officer RESERVE BANK OF INDIA
(equivalent to Secretary Planning Commission)
runs the affairs of the institution. ▪ The Reserve Bank of India was established on
April 1, 1935 in accordance with the provisions of
NITI AAYOG – KEY OBJECTIVES
the Reserve Bank of India Act, 1934.
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▪ The Central Office of the Reserve Bank was
initially established in Calcutta but was
permanently moved to Mumbai in 1937. The
Central Office is where the Governor sits and
where policies are formulated.
▪ Though originally privately owned, since
nationalisation in 1949, the Reserve Bank is fully
owned by the Government of India.
▪ The Reserve Bank's affairs are governed by a
central board of directors. The board is
appointed by the Government of India in keeping
with the Reserve Bank of India Act. Directors of
the Board are Appointed/nominated for a period
of four years. Composition of the Board is as
follows:
o Official Directors: Governor and not more
than four Deputy Governors
o Non-official Directors: Nominated by
Government: ten Directors from various
fields and two government Official.
Others: four Directors - one each from
four local boards
▪ Local Board: There is one local board each for the
four regions of the country in Mumbai, Calcutta,
Chennai and New Delhi. Each Local Board
consists of five members each, appointed by the
Central Government for a term of four years.
▪ Board for Financial Supervision:
o The Reserve Bank of India performs the
supervisory function under the guidance
of the Board for Financial Supervision
(BFS). The Board was constituted in
November 1994 as a committee of the
Central Board of Directors of the Reserve
Bank of India under the Reserve Bank of
India (Board for Financial Supervision)
Regulations, 1994.
o The primary objective of BFS is to
undertake consolidated supervision of
the financial sector comprising Scheduled
Commercial and Co-operative Banks, All
India Financial Institutions, Local Area
Banks, Small Finance Banks, Payments
Banks, Credit Information Companies,
Non-Banking Finance Companies and
Primary Dealers.
o The Board is constituted by co-opting
four Directors from the Central Board as
Members and is chaired by the Governor.
The Deputy Governors of the Reserve
Bank are ex-officio members. One Deputy
Governor, traditionally, the Deputy
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Governor in charge of supervision, is
nominated as the Vice-Chairman of the
Board.
MAIN FUNCTIONS OF RBI
Monetary Authority:
▪ Formulates, implements and monitors the
monetary policy.
▪ Objective: maintaining price stability while
keeping in mind the objective of growth.
Regulator and supervisor of the financial system:
▪ Prescribes broad parameters of banking
operations within which the country's banking
and financial system functions.
▪ Objective: maintain public confidence in the
system, protect depositors' interest and provide
cost-effective banking services to the public.
Manager of Foreign Exchange
▪ Manages the Foreign Exchange Management
Act, 1999.
▪ Objective: to facilitate external trade and
payment and promote orderly development and
maintenance of foreign exchange market in
India.
Issuer of currency:
▪ Issues and exchanges or destroys currency and
coins not fit for circulation.
▪ Objective: to give the public adequate quantity
of supplies of currency notes and coins and in
good quality.
Developmental role
▪ Performs a wide range of promotional functions
to support national objectives.
Regulator and Supervisor of Payment and
Settlement Systems:
▪ Introduces and upgrades safe and efficient
modes of payment systems in the country to
meet the requirements of the public at large.
▪ Objective: maintain public confidence in
payment and settlement system
Related Functions
▪ Banker to the Government: performs merchant
banking function for the central and the state
governments; also acts as their banker.
▪ Banker to banks: maintains banking accounts of
all scheduled banks.
QUESTION 1
Q. Consider the following statements: [2004]
1. Reserve Bank of India was nationalized on 26
January, 1950
 2. The borrowing programme of the Government
of India is handled by the Department of
Expenditure, Ministry of Finance
Which of the statements given above is/are
correct?
(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) Neither 1 nor 2
Answer: D
SECURITIES AND EXCHANGE BOARD
OF INDIA
▪ Securities and Exchange Board of India (SEBI) is a
statutory regulatory body entrusted with the
responsibility to regulate the Indian capital
markets. It monitors and regulates the securities
market and protects the interests of the
investors by enforcing certain rules and
regulations.
▪ SEBI was founded on April 12, 1992, under the
SEBI Act, 1992. Headquartered in Mumbai, India,
SEBI has regional offices in New Delhi, Chennai,
Kolkata and Ahmedabad along with other local
regional offices across prominent cities in India.
▪ The objective of SEBI is to ensure that the Indian
capital market works in a systematic manner and
provide investors with a transparent
environment for their investment. To put it
simply, the primary reason for setting up SEBI
was to prevent malpractices in the capital market
of India and promote the development of the
capital markets.
COMPOSITION OF THE BOARD:
▪ Chairman
▪ Two members from amongst the officials of the
Ministry of the Central Government dealing with
Finance 6[and administration of the Companies
Act, 1956.
▪ one member from amongst the officials of
Reserve Bank of India
▪ Five other members of whom at least three shall
be the whole-time members, to be appointed by
the Central Government
FUNCTIONS OF THE BOARD
▪ Regulating the business in stock exchanges and
any other securities markets.
▪ Registering and regulating the working of
stock brokers, sub-brokers, share transfer
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agents, bankers to an issue, trustees of trust
deeds, registrars to an issue, merchant
bankers, underwriters, portfolio managers,
investment advisers and such other
intermediaries who may be associated with
securities markets in any manner.
▪ Registering and regulating the working of the
depositories,14[participants], custodians of
securities, foreign institutional investors, credit
rating agencies and such other intermediaries
as the Board may, by notification, specify in this
behalf.
▪ Registering and regulating the working of
venture capital funds and collective
investment schemes, including mutual funds.
▪ Promoting and regulating self-regulatory
organisations.
▪ Prohibiting fraudulent and unfair trade practices
relating to securities markets.
▪ Promoting investors‘ education and training of
intermediaries of securities markets.
▪ Prohibiting insider trading in securities.
▪ Regulating substantial acquisition of shares and
take over of companies.
▪ Calling for information from, undertaking
inspection, conducting inquiries and audits of the
16[stock exchanges, mutual funds, other
persons associated with the securities market],
intermediaries and self-regulatory organisations
in the securities market.
PENSION FUND REGULATORY &
DEVELOPMENT AUTHORITY
▪ The Government of India had, in the year 1999,
commissioned a national project titled “OASIS”
(an acronym for old age social & income security)
to examine policy related to old age income
security in India.
▪ Based on the recommendations of the OASIS
report, Government of India introduced a new
Defined Contribution Pension System for the
new entrants to Central/State Government
service, except to Armed Forces, replacing the
existing system of Defined Benefit Pension
System.
▪ On 23rd August, 2003, Interim Pension Fund
Regulatory & Development Authority (PFRDA)
was established through a resolution by the
Government of India to promote, develop and
regulate pension sector in India.
▪ The contributory pension system was notified by
the Government of India on 22nd December,
2003, now named the National Pension System
(NPS) with effect from the 1st January, 2004. The
NPS was subsequently extended to all citizens of
the country w.e.f. 1st May, 2009 including self
employed professionals and others in the
unorganized sector on a voluntary basis.
▪ The Pension Fund Regulatory & Development
Authority Act was passed on 19th September,
2013 and the same was notified on 1st February,
2014.
▪ Headquarters: New Delhi
▪ Composition: The Authority shall consist of a
Chairperson and not more than six members, of
whom at least three shall be Whole-Time
Members, to be appointed by the Central
Government.
▪ PFRDA is regulating NPS, subscribed by
employees of Govt. of India, State Governments
and by employees of private
institutions/organizations & unorganized
sectors. The PFRDA is ensuring the orderly
growth and development of pension market.
FUNCTIONS OF PFRDA
▪ Promote pension scheme in the country by
fostering mandatory as well as voluntary pension
schemes in order to serve the old age income
needs of retired personnel
▪ National Pension System, both tier 1 and tier 2
are under the purview of PFRDA and are dictated
by the same
▪ PFRDA performs the function of appointing
various intermediate agencies like Pension Fund
Managers, Central Record Keeping Agency (CRA)
etc.
▪ Educating the general public and stakeholders
about the importance of pension.
▪ Training of intermediaries that perform the task
of popularizing and educating people about the
importance of pension.
▪ Addressing grievances related to various pension
schemes in the country.
▪ Addressing and resolving disputes between
various intermediaries like banks and between
customers and intermediaries.
INSURANCE REGULATORY AND
DEVELOPMENT AUTHORITY
BACKGROUND
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▪ 1991: Government of India begins the economic
reforms programme and financial sector reforms
▪ 1993: Committee on Reforms in the Insurance
Sector, headed by Mr. R. N. Malhotra, (Retired
Governor, Reserve Bank of India) set up to
recommend reforms.
▪ 1994: The Malhotra Committee recommends
certain reforms having studied the sector and
hearing out the stakeholders
▪ Some recommended reforms: Private sector
companies should be allowed to promote
insurance companies; Foreign promoters should
also be allowed; Government to vest its
regulatory powers on an independent regulatory
body answerable to Parliament
▪ Insurance Regulatory and Development
Authority (IRDA) set up as autonomous body
under the IRDA Act, 1999
▪ IRDAI’s Mission: To protect the interests of
policyholders, to regulate, promote and ensure
orderly growth of the insurance industry and for
matters connected therewith or incidental
thereto.
FUNCTIONS OF IRDAI
Section 14 of the IRDA Act, 1999 lays down the
duties, powers and functions of IRDA.
▪ Registering and regulating insurance companies
▪ Protecting policyholders’ interests
▪ Licensing and establishing norms for insurance
intermediaries
▪ Promoting professional organisations in
insurance
▪ Regulating and overseeing premium rates and
terms of non-life insurance covers
▪ Specifying financial reporting norms of insurance
companies
▪ Regulating investment of policyholders’ funds by
insurance companies
▪ Ensuring the maintenance of solvency margin by
insurance companies
▪ Ensuring insurance coverage in rural areas and of
vulnerable sections of society
INSURANCE PSUS
LIFE INSURANCE CORPORATION OF INDIA
▪ Life Insurance Corporation of India is an Indian
state-owned insurance group and investment
corporation owned by the Government of India.
▪ Headquarters: Mumbai
▪ Owner: Government of India (100%)
▪ Founder: Government of India
▪ Founded: 1 September 1956
NATIONAL INSURANCE COMPANY LIMITED
▪ National Insurance Company Limited is a state-
owned general insurance company in India. Its
catchline is "Trusted Since 1906" in italic. The
company headquartered at Kolkata was
established in 1906 and nationalised in 1972.
▪ Headquarters: Kolkata
▪ Owner: Government of India
▪ Founded: 1906
▪ After nationalisation in 1972, NICL operated as a
subsidiary of General Insurance Corporation of
India (GIC). National Insurance Company Limited
was spun off as a distinct company under the
General Insurance Business (Nationalisation)
Amendment Act in 2002.
UNITED INDIA INSURANCE COMPANY
▪ United India Insurance Company is an Indian
leading general insurance company. Previously it
was a subsidiary of the General Insurance
Corporation of India (GIC). But when GIC became
a re-insurance company as per the IRDA Act
1999, its four primary insurance subsidiaries New
India Assurance, United India Insurance, Oriental
Insurance and National Insurance got autonomy,
with effect from March 21, 2003.
▪ Headquarters: Chennai
▪ Founded: 18 February 1938
GENERAL INSURANCE CORPORATION OF INDIA
▪ GIC of India is a state owned enterprise in India.
It was the sole reinsurance company in the Indian
insurance market until the insurance market was
open to foreign reinsurance players by late 2016
including companies from Germany, Switzerland
and France.
▪ Headquarters: Mumbai
▪ Founded: 22 November 1972
▪ Owner: Government of India
QUESTION 2
Q. Consider the following statements: [2006]
1. Life Insurance Corporation of India is the oldest
insurance company in India.
2. National Insurance Company Limited was
nationalized in the year 1972 and made a
subsidiary of General Insurance Corporation of
India.
3. Headquarters of United Indian Insurance
Company Limited are located at Chennai.
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Which of the statements given above are
correct?
(a) 1, 2 and 3
(b) 1 and 2 only
(c) 2 and 3 only
(d) 1 and 3 only
Answer: C
FINANCIAL STABILITY AND
DEVELOPMENT COUNCIL
▪ In pursuance of the announcement made in the
Union Budget 2010–11 and with a view to
strengthen and institutionalize the mechanism
for maintaining financial stability and enhancing
inter-regulatory coordination, Indian
Government has setup an apex-level Financial
Stability and Development Council (FSDC).
▪ The Chairman of the FSDC is the Finance Minister
of India and its members include the heads of the
financial sector regulatory authorities (i.e, SEBI,
IRDA, RBI, PFRDA) , Finance Secretary and/or
Secretary, Department of Economic Affairs
(Ministry of Finance), Secretary, (Department of
Financial Services, Ministry of Finance) and the
Chief Economic Adviser.
▪ It is apex body of sectoral regulators and not a
statutory body.
▪ Without prejudice to the autonomy of
regulators, this Council would monitor macro
prudential supervision of the economy, including
the functioning of large financial conglomerates.
It will address inter-regulatory coordination
issues and thus spur financial sector
development. It will also focus on financial
literacy and financial inclusion.
▪ Among other things, it deals with issues relating
to financial stability, financial literacy, financial
inclusion, financial sector development. No
separate funds are allocated to Council for
undertaking its activities.
▪ A sub-committee of FSDC has also been set up
under the chairmanship of Governor RBI. The
Sub-Committee discusses and decides on a range
of issues relating to financial sector development
and stability including substantive issues relating
to inter-regulatory coordination.
QUESTION 3
 Q. With reference to ‘Financial Stability and
Development Council’, consider the following
statements: [2016]
1. It is an organ of NITI Aayog.
2. It is headed by the Union Finance Minister.
3. It monitors macroprudential supervision of the
economy.
Which of the statements given above is/are
correct?
(a) 1 and 2 only
(b) 3 only
(c) 2 and 3 only
(d) 1, 2 and 3
Answer: C
NATIONAL BANK FOR AGRICULTURE
AND RURAL DEVELOPMENT
▪ The importance of institutional credit in boosting
rural economy has been clear to the Government
of India right from its early stages of planning.
Therefore, the Reserve Bank of India (RBI) at the
insistence of the Government of India,
constituted a Committee to Review the
Arrangements for Institutional Credit for
Agriculture and Rural Development (CRAFICARD)
to look into these very critical aspects.
▪ The Committee was formed on 30 March 1979,
under the Chairmanship of Shri B. Sivaraman,
former member of Planning Commission,
Government of India.
▪ The Committee’s interim report, submitted on
28 November 1979, outlined the need for a new
organisational device for providing undivided
attention, forceful direction and pointed focus to
credit related issues linked with rural
development. Its recommendation was
formation of a unique development financial
institution which would address these
aspirations and formation of National Bank for
Agriculture and Rural Development (NABARD)
was approved by the Parliament through Act 61
of 1981.
▪ NABARD came into existence on 12 July 1982 by
transferring the agricultural credit functions of
RBI and refinance functions of the then
Agricultural Refinance and Development
Corporation (ARDC).
▪ Headquarters: Mumbai
FUNCTIONS OF NABARD
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NON-CREDIT RELATED:
▪ Credit Planning and Monitoring, Coordination
with various agencies and institutions.
▪ Assist in policy formulation of GoI, RBI and State
Governments on matters related to agricultural
credit and rural development
▪ Institutional development and capacity building
of Cooperatives and Regional Rural Banks (RRBs)
to strengthen the rural credit delivery system.
Statutory inspection of Regional Rural Banks
(RRBs), State Cooperative Banks and District
Central Cooperative Banks (DCCBs), voluntary
inspection of State Cooperative Agriculture and
Rural Development Banks (SCARDBs) and their
off-site surveillance
▪ Promotional and developmental initiatives in the
areas of farm, off-farm, micro finance, financial
inclusion, Convergence with Govt sponsored
programmes.
▪ Supporting the financial inclusion efforts of
Regional Rural Banks and Cooperative Banks
▪ Thrust on promotion of livelihood opportunities
and Micro Enterprises
▪ Capacity Building of Personnel and Board
Members of Credit Cooperatives and Staff of
Rural Financial Institutions.
▪ Support to research and development, rural
innovations, etc.
CREDIT RELATED:
▪ Refinance to Rural Financial Institutions for
investment credit (long term loan) and
production and marketing credit (short term
loan) purposes for farm and off-farm activities in
rural areas.
▪ Loans to State Governments for developing rural
infrastructure and strengthening of the
Cooperative Credit Structure
▪ Loans for warehousing infrastructure to State
Governments, State/ Central government
Owned/ assisted entities, Cooperatives,
Federation of cooperatives, Farmers’ Producers
Organizations,(FPOs), Federations of Farmers’
Collectives, Primary Agricultural Credit Societies
(PACS) / Cooperative Marketing Societies (CMS)
or similar institutions, Corporates/ Companies,
Individual entrepreneurs, etc.,
▪ Direct lending to Cooperatives and Producers’
Organization, support to State owned
institutions /corporations under NABARD
Infrastructure Development Assistance and
direct lending to individuals, partnership firms,
corporates, NGOs, MFIs, Farmers’ collectives etc.
 under Umbrella Programme for Natural
Resource Management (UPNRM)
▪ Pass through agency of select Government of
India Capital Investment Subsidy Schemes.
SUBSIDIARIES OF NABARD
▪ NABARD Consultancy Services (NABCONS)
▪ NABVENTURES
▪ Nabkisan Finance Ltd.
▪ NABSAMRUDDHI Finance Limited
QUESTION 4
Q. Consider the following financial institutions of
India: [2002]
1. Industrial Finance Corporation of India (IFCI)
2. Industrial Credit and Investment Corporation of
India (ICICI)
3. Industrial Development Bank of India (IDBI)
4. National Bank for Agriculture and Rural
Development (NABARD)
The correct chronological sequence of the
establishment of these institutions is:
(a) 1, 2, 3, 4
(b) 2, 3, 4, 1
(c) 3, 4, 1, 2
(d) 4, 1, 2, 3
Answer: A
Explanation: IFCI – 1948; ICICI – 1955; IDBI – 1964;
NABARD 1982
SMALL INDUSTRIES DEVELOPMENT
BANK OF INDIA
▪ Small Industries Development Bank of India
(SIDBI) was set up on 2nd April 1990 under the
Act of Indian Parliament. It is the principal
financial institution for the promotion, financing
and development of the Micro, Small and
Medium Enterprise (MSME) sector and for co-
ordination of the functions of the institutions
engaged in similar activities.
▪ SIDBI was originally 100 per cent owned by IDBI,
when it was a term lending institution. Later in
2000, it divested 51 per cent stake in favour of
government owned banks and insurance
companies.
▪ Headquarters: Lucknow
SIDBI – RECENT DEVELOPMENTS
▪ In 2018 launched two funds the India Aspiration
Fund (IAF) and SIDBI Make in India Loan for
Enterprises (SMILE). SIDBI under the first fund
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India Aspiration Fund (IAF) would invest in
venture capital funds for meeting the equity
requirement of MSME start-ups. Under second
fund the SIDBI Make in India Loan for Enterprises
(SMILE) is a debt-fund which will carter soft term
loans to MSMEs to meet debt-to-equity norms
and pursue growth opportunities.
▪ SIDBI (Small Industries Development Bank of
India) and ratings agency Crisil have launched
CriSidEx, India’s first MSE Sentiment Index for
micro, small and medium enterprises (MSMEs).
The index will help to indicate the current state
and expected outlook on the MSME sector every
quarter.
▪ Small Industries Development Bank of India
(SIDBI) has launched Udyam Abhilasha (उद्यम
अभिलाषा), a national level entrepreneurship
awareness campaign. It was launched in 115
Aspirational Districts identified by NITI Aayog in
28 States.
▪ Government of India launched portal
http://www.psbloansin59minutes.com to
enable micro, small and medium enterprises
(MSMEs) to get in-principle approval of loans
within hour without need for branch visit. The
web portal will enable in principle approval for
MSME loans up to Rs. 1 crore within 59 minutes
from SIDBI and 5 Public Sector Banks.
NATIONAL HOUSING BANK
▪ The Sub-Group on Housing Finance for the
Seventh Five Year Plan (1985-90) identified the
non-availability of long-term finance to
individual households on any significant scale as
a major lacuna impeding progress of the housing
sector and recommended the setting up of a
national level institution.
▪ The Committee of Secretaries considered’ the
recommendation and set up the High Level
Group under the Chairmanship of Dr. C.
Rangarajan, the then Deputy Governor, RBI to
examine the proposal and recommended the
setting up of National Housing Bank as an
autonomous housing finance institution. The
recommendations of the High Level Group were
accepted by the Government of India.
▪ The Hon’ble Prime Minister of India, while
presenting the Union Budget for 1987-88 on
February 28, 1987 announced the decision to
establish the National Housing Bank (NHB) as an
apex level institution for housing finance.
 Following that, the National Housing Bank Bill (91
of 1987) providing the legislative framework for
the establishment of NHB was passed by
Parliament in the winter session of 1987 and with
the assent of the Hon’ble President of India on
December 23, 1987, became an Act of
Parliament.
▪ The National Housing Policy, 1988 envisaged the
setting up of NHB as the Apex level institution for
housing.
▪ In pursuance of the above, NHB was set up on
July 9, 1988 under the National Housing Bank
Act, 1987.
▪ Reserve Bank of India contributed the entire
paid-up capital.
▪ The general superintendence, direction and
management of the affairs and business of NHB
vest, under the Act, in a Board of Directors.
▪ The Head Office of NHB is at New Delhi.
OBJECTIVES OF NHB
NHB has been established to achieve, inter alia, the
following objectives-
▪ To promote a sound, healthy, viable and cost
effective housing finance system to cater to all
segments of the population and to integrate the
housing finance system with the overall financial
system.
▪ To promote a network of dedicated housing
finance institutions to adequately serve various
regions and different income groups.
▪ To augment resources for the sector and
channelise them for housing.
▪ To make housing credit more affordable.
▪ To regulate the activities of housing finance
companies based on regulatory and supervisory
authority derived under the Act.
▪ To encourage augmentation of supply of
buildable land and also building materials for
housing and to upgrade the housing stock in the
country.
▪ To encourage public agencies to emerge as
facilitators and suppliers of serviced land, for
housing.
NHB – RECENT DEVELOPMENT
▪ In August 2019 opened a liquidity infusion facility
of Rs.10000 crore for Housing Finance
Companies (HFCs) to improve liquidity in sector.
The move is taken to unveil measures to boost
lending and accelerate growth.
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▪ In April 2019, RBI sold its entire stakes in the
National Bank for Agriculture & Rural
Development (NABARD) and National Housing
Bank. The decision to divest its entire stake was
taken based on the recommendations of the
second Narasimham Committee. The committee
had stated that RBI could not own those entities
which are regulated by it. The government now
holds a 100 per cent stake in both NHB and
NABARD.
QUESTION 5
Q. Consider the following statements: [2004]
1. The National Housing Bank the apex institution
of housing finance in India, was set up as a wholly
owned subsidiary of the Reserve Bank of India.
2. The Small Industries Development Bank of India
was established as a wholly owned subsidiary of
the Industrial Development Bank of India.
Which of the statements given above is/are
correct?
(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) Neither 1 nor 2
Answer: C
QUESTION 6
Q. The National Housing Bank was set up in India
as a wholly-owned subsidiary of which one of the
following? [2007]
(a) State Bank of India
(b) Reserve Bank of India
(c) ICICI Bank
(d) Life Insurance Corporation of India
Answer: B
EXIM BANK
▪ Export–Import Bank of India is a finance
institution in India, established in 1982 under
Export-Import Bank of India Act 1981. Since its
inception, Exim Bank of India has been both a
catalyst and a key player in the promotion of
cross border trade and investment.
▪ Headquarters: Mumbai
▪ Founded: 1 January 1982
▪ Exim Bank assists the Industries across wide
avenues like import of technology, export
product development, export production, export
 marketing, pre-shipment and post-shipment and
overseas investment.
▪ Concessional Finance Scheme is being operated
through EXIM Bank. Under CFS, Ministry of
External Affairs (MEA) selects specific projects
keeping in view strategic interest of India and
sends same to Department of Economic Affairs
(DEA). Once project is approved by Committee,
DEA issues formal letter to Export-Import (EXIM)
Bank conveying approval for financing of project.
Union Government provides counter guarantee
and interest equalization support of 2% to EXIM
Bank to offer concessional finance to any foreign
Government or its owned or controlled entity, if
any Indian entity, succeeds in getting contract for
execution of project. EXIM Bank can extend
credit at rate not exceeding LIBOR (avg. of six
months) + 100 bps. The repayment of loan is
guaranteed by foreign government. Prior to
introduction of CFS, Indian entities were not able
to bid for large projects abroad since cost of
financing was very high for them and bidders
from other countries such as China, Japan,
Europe and US were able to provide credit at
superior terms (i.e. lower interest rate and
longer tenures giving advantage to bidders from
those countries).
▪ EXIM Bank extends LoC to overseas financial
institutions, regional development banks,
sovereign governments and other entities
abroad. It enables buyers in those countries to
import developmental and infrastructure,
equipment’s, goods and services from India on
deferred credit terms. It also facilitates
investment by Indian companies abroad for
setting up subsidiaries, joint ventures or
overseas acquisitions.
GOODS & SERVICES TAX COUNCIL
▪ It is a constitutional body for making
recommendations to the Union and State
Government on issues related to Goods and
Service Tax. The GST Council is chaired by the
Union Finance Minister and other members are
the Union State Minister of Revenue or Finance
and Ministers in-charge of Finance or Taxation of
all the States.
▪ The Constitution (One Hundred and Twenty-
Second Amendment) Bill, 2016, for introduction
of Goods and Services tax in the country was
introduced in the Parliament and passed by Rajya
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Sabha on 3rd August, 2016 and by Lok Sabha on
8th August, 2016. Consequent upon this, the
Hon’ble President of India accorded assent on
8th September, 2016, and the same was notified
as the Constitution (One Hundred and First
Amendment) Act, 2016.
▪ As per Article 279A of the amended Constitution,
the GST Council which will be a joint forum of the
Centre and the States, shall consist of the
following members:
o Chairperson: Union Finance Minister
o Member: Union Minister of State in
charge of Revenue or Finance
o Members: Minister in charge of Finance
or Taxation or any other Minister
nominated by each State Government
▪ The Goods and Services Tax Council shall make
recommendations to the Union and the States
on—
o the taxes, cesses and surcharges levied by
the Union, the States and the local bodies
which may be subsumed in the goods and
services tax;
o the goods and services that may be
subjected to, or exempted from the
goods and services tax;
o model Goods and Services Tax Laws,
principles of levy, apportionment of
Goods and Services Tax levied on supplies
in the course of inter-State trade or
commerce under article 269A and the
principles that govern the place of supply;
o the threshold limit of turnover below
which goods and services may be
exempted from goods and services tax;
o the rates including floor rates with bands
of goods and services tax;
o any special rate or rates for a specified
period, to raise additional resources
during any natural calamity or disaster;
o special provision with respect to the
States of Arunachal Pradesh, Assam,
Jammu and Kashmir, Manipur,
Meghalaya, Mizoram, Nagaland, Sikkim,
Tripura, Himachal Pradesh and
Uttarakhand; and
o any other matter relating to the goods
and services tax, as the Council may
decide.
▪ One-half of the total number of Members of the
Goods and Services Tax Council shall constitute
the quorum at its meetings.
▪ Every decision of the Goods and Services Tax
Council shall be taken at a meeting, by a majority
of not less than three-fourths of the weighted
votes of the members present and voting, in
accordance with the following principles,
namely: —
o the vote of the Central Government shall
have a weightage of one third of the total
votes cast, and
o the votes of all the State Governments
taken together shall have a weightage of
two-thirds of the total votes cast, in that
meeting.
NATIONAL PAYMENTS CORPORATION
OF INDIA
▪ National Payments Corporation of India (NPCI),
an umbrella organisation for operating retail
payments and settlement systems in India, is an
initiative of Reserve Bank of India (RBI) and
Indian Banks’ Association (IBA) under the
provisions of the Payment and Settlement
Systems Act, 2007, for creating a robust Payment
& Settlement Infrastructure in India.
▪ Considering the utility nature of the objects of
NPCI, it has been incorporated as a “Not for
Profit” Company under the provisions of Section
25 of Companies Act 1956 (now Section 8 of
Companies Act 2013), with an intention to
provide infrastructure to the entire Banking
system in India for physical as well as electronic
payment and settlement systems.
▪ The ten core promoter banks are State Bank of
India, Punjab National Bank, Canara Bank, Bank
of Baroda, Union Bank of India, Bank of India,
ICICI Bank, HDFC Bank, Citibank N. A. and HSBC.
In 2016 the shareholding was broad-based to 56
member banks to include more banks
representing all sectors.
▪ RuPay is an Indigenously developed Payment
System – designed to meet the expectation and
needs of the Indian consumer, banks and
merchant eco-system. RuPay supports the
issuance of debit, credit and prepaid cards by
banks in India and thereby supporting the
growth of retail electronic payments in India.
▪ With Immediate Payment Service (IMPS), India
has become the leading country in the world in
real time payments in retail sector.
▪ National Automated Clearing House (NACH), an
offline web based system for bulk push and pull
transactions. NACH provides electronic mandate
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platform to register mandates facilitating paper
less collection process for the corporates and
banks. It provides for both account based and
Aadhaar based transactions.
▪ Aadhaar Payment Bridge (APB) System is helping
the Government and Government agencies in
making the Direct Benefit Transfers for various
Central as well as State sponsored schemes. To
access these funds at door step & drive the
financial inclusion in India, Aadhaar enabled
Payment System(AePS) has been introduced.
▪ National Financial Switch (NFS) is the largest
network of shared Automated Teller Machines
(ATMs) in India facilitating interoperable cash
withdrawal, card to card funds transfer and
interoperable cash deposit transactions among
other value added services in the country.
▪ Unified Payments Interface (UPI) has been
termed as the revolutionary product in the
payment system and Bharat Bill Payment System
is currently offering one-stop bill payment
solution with 150+ Billers in the five approved
categories Viz. Electricity, Gas, Water, Telecom
and DTH across India.
▪ National Payments Corporation of India (NPCI)
has developed the National Electronic Toll
Collection (NETC) program to meet the
electronic tolling requirements of the Indian
market. It provides an electronic payment facility
to customer to make the payments at national,
state and city toll plazas by identifying the vehicle
uniquely through a FASTag. FASTag are Radio-
Frequency Identification (RFID) stickers which
are affixed on the vehicle windshield and enable
the driver to make toll payments electronically
while the vehicle is in motion without stopping at
the Toll plazas by saving Fuel and Time.
QUESTION 7
Q. Which one of the following links all the ATMs
in India? [2018]
(a) Indian Banks’ Association
(b) National Securities Depository Limited
(c) National Payments Corporation of India
(d) Reserve Bank of India
Answer: C
QUALITY COUNCIL OF INDIA
▪ The Quality Council of India (QCI) is a pioneering ▪ To facilitate effective functioning of a National
experiment of the Government of India in setting Information & Enquiry Services on standards &
up organizations in partnership with the Indian quality including an appeal mechanism to deal
industry. with unresolved complaints.
▪ QCI is an autonomous organization under the
Department for Promotion of Industry and
QUESTION 8
Internal Trade, Ministry of Commerce and
Q. With reference to ‘Quality Council of India
Industry, established in 1997.
(QCI)’, consider the following statements: [2017]
▪ It is the Quality Apex and National Accreditation
1. QCI was set up jointly by the Government of
Body for accreditation and quality promotion in
India and the Indian Industry.
India.
2. Chairman of QCI is appointed by the Prime
▪ The Council was established to provide a
Minister on the recommendations of the industry
credible, reliable mechanism for third party
to the Government.
assessment of products, services and processes
Which of the above statements is/are correct?
which is accepted and recognized globally.
(a) 1 only
▪ It was created jointly with three Indian industry
(b) 2 only
namely Confederation of Indian Industry (CII),
(c) Both 1 and 2
Federation of Indian Chambers of Commerce and
(d) Neither 1 nor 2
Industry (FICCI) and Associated Chambers of
Answer: C
Commerce and Industry (ASSOCHAM).
▪ QCI is governed by a Council comprising of 38
members including the Chairman and Secretary DISTRICT MINERAL FOUNDATION
General. The Council has an equal representation
of Government, Industry and other Stakeholders. ▪ District Mineral Foundation (DMF) is a trust set
▪ Chairman of QCI is appointed by the Prime up as a non-profit body, in those districts
Minister on recommendation of the industry to affected by the mining works, to work for the
the government. interest and benefit of persons and areas
affected by mining related operations. It is
QCI – OBJECTIVES
funded through the contributions from miners.
▪ Its manner of operation comes under the
▪ To establish and operate national accreditation
jurisdiction of the relevant State Government.
structure and promote quality through National
▪ Setting up of District Mineral Foundations
Quality Campaign.
(DMFs) in all districts in the country affected by
▪ The Mission of QCI is to lead nationwide quality
mining related operations was mandated
movement in India by involving all stakeholders
through the Mines and Minerals (Development
for emphasis on adherence to quality standards
& Regulation) Amendment Act, (MMDRA) 2015.
in all spheres of activities primarily for promoting
On 16 September 2015, Central Government
and protecting interests of the nation and its
issued a notification directing states to set up
citizens.
DMF.
▪ To lead nationwide quality movement in the
▪ In addition, the Central Government notified on
country through National Quality Campaign
17 September 2015, the rates of contribution
aimed at creating awareness amongst citizens,
payable by miners to the DMFs. In case of all
empowering them to demand quality in all
mining leases executed before 12th January,
spheres of activities, and promoting and
2015 (the date on which MMDR Amendment Act
protecting their well being by encouraging
came into force) miners will have to contribute
manufacturers and suppliers of goods and
an amount equal to 30% of the royalty payable
service providers for adoption of and adherence
by them to the DMFs. Where mining leases are
to quality standards and tools.
granted after 12.01.2015, the rate of
▪ To promote quality competitiveness of India’s
contribution would be 10% of the royalty
enterprises especially MSMEs through adoption
payable (Subsequent to the enactment of MMDR
of and adherence to quality management
Amendment Act, mining leases are given out
standards and quality tools.
after auctions; hence, a lower levy).
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▪ Thus, every holder of a mining lease or a
prospecting licence-cum-mining lease shall, in
addition to the royalty, pay to the District
Mineral Foundation of the district in which their
mining operations are carried on. If the mining
area is spread across several districts, the fund is
shared on a pro-rata basis by these districts. DMF
contribution would not be exceeding one-third
of royalty and the Central Government retains
the power to prescribe the rates of contribution,
though DMF’s operation is under state
governments. The contributions made to DMFs
are collected by the State Governments and the
details in this regard are not maintained centrally
at the moment.
▪ Under the above mentioned MMRD Amendment
Act of 2015, a provision was made also to create
a National Mineral Exploration Trust under the
jurisdiction of central government, with 2% of
royalty as levy, for boosting detailed exploration
of minerals.
▪ The contribution to DMFs has been made
effective from 12 January, 2015 though DMF was
notified only on 16 September 2015. At the
above mentioned prescribed rates of
contribution, it’s expected that, nearly Rs.6000
crore could be utilized for the development of
mining areas of different States, at the current
level of royalty collection.
▪ DMF funds are treated as extra-budgetary
resources for the State Plan. Efforts are made to
achieve convergence with the State and the
District Plans so that the activities taken up by
the DMF can supplement the development and
welfare activities already being carried out.
▪ Further, using the funds generated by this
contribution, the DMFs are expected to
implement the Pradhan Mantri Khanij Kshetra
Kalyan Yojana (PMKKKY), launched on 17
September 2015 for the welfare of mining areas
and affected population. The Central
Government has issued a directive to the State
Governments, under Section 20A of the MMDR
Act, 1957, laying down the guidelines for
implementation of PMKKKY and directing the
States to incorporate the same in the Rules
framed by them for the DMFs.
▪ The DMFs have also been directed to maintain
utmost transparency in their functioning and
provide periodic reports on the various projects
and schemes taken up by them, on their website.
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▪ As per sub-section (3) of section 9B of MMDR
Act, 1957, the composition and functions of the
DMF are prescribed by the State Government.
Therefore, the composition of DMF, including as
to whether it would have representatives of the
local communities etc. is a matter which is under
the legislative and administrative jurisdiction of
State Government.
▪ Mining related operations largely affect less
developed and very remote areas of the country,
and vulnerable sections of the population,
especially Scheduled Tribes. Therefore, it is
especially necessary that special care and
attention is devoted, in an organized and
structured manner so as to ensure that these
areas and affected persons are benefitted by the
mineral wealth in their regions and are
empowered to improve their standard of living.
It is with this objective that DMF and PMKKKY
were launched by the Government.
QUESTION 9
Q. What is/are the purpose/purposes of ‘District
Mineral Foundations’ in India? [2016]
1. Promoting mineral exploration activities in
mineral-rich districts.
2. Protecting the interests of the persons affected
by mining operations
3. Authorizing State Governments to issue licenses
for mineral exploration.
Select the correct answer using the code given
below:
(a) 1 and 2 only
(b) 2 only
(c) 1 and 3 only
(d) 1, 2 and 3
Answer: B
INTERNATIONAL INSTITUTIONS
WORLD BANK
▪ The World Bank was created in 1944 out of the
Bretton Woods Agreement, which was secured
under the auspices of the United Nations in the
latter days of World War II.
▪ The original goals of both the World Bank and
IMF were to support European and Asian
countries needing financing to fund post-war
reconstruction efforts.
▪ The World Bank is headquartered in Washington, 3% of the world population. The second is to
D.C. increase overall prosperity by increasing income
▪ Though titled as a bank, the World Bank, is not growth in the bottom 40% of every country in the
necessarily a bank in the traditional, chartered world.
meanings of the word. The World Bank and its ▪ Report published by World Bank
subsidiary groups operate within their own o Global Economic Prospects
provisions and develop their own proprietary o World Development Report
financial assistance products, all with the same o Ease of Doing Business
goal of serving countries' capital needs o International Debt Statistics
internationally.
▪ Through the years, the World Bank has expanded
QUESTION 10
from a single institution to a group of five unique
Q. Which of the following constitute the World
and cooperative institutional organizations,
Bank? [1995]
known as the World Banks or collectively as the
1. International Bank for Reconstruction and
World Bank Group.
Development
▪ The first organization is the International Bank
2. International Finance Corporation
for Reconstruction and Development (IBRD), an
3. International Development Association
institution that provides debt financing to
4. International Monetary Fund
governments that are considered middle
Codes:
income.
(a) 1, 2 and 3
▪ The second organization within the World Bank
(b) 1 and 2
Group is the International Development
(c) 3 and 4
Association (IDA), a group that gives interest-free
(d) 1, 2, 3 and 4
loans to the governments of poor countries.
Answer: A
▪ IDA is that part of the World Bank that helps the
world’s poorest countries. It complements the
World Bank’s other lending arm— the QUESTION 11
International Bank for Reconstruction and Q. The International Development Association, a
Development (IBRD) which serves middle- lending agency, is administered by the [2010]
income countries with capital investment and (a) International Bank for Reconstruction and
advisory services. IDA was created in 1960. Development
▪ The International Finance Corporation (IFC), the (b) International Fund for Agricultural
third organization, focuses on the private sector Development
and provides developing countries with (c) United Nations Development Programme.
investment financing and financial advisory (d) United Nations Industrial Development
services. Organization
▪ The fourth part of the World Bank Group is the Answer: A
Multilateral Investment Guarantee Agency
(MIGA), an organization that promotes foreign
direct investments in developing countries. QUESTION 12
▪ The fifth organization is the International Centre Q. India’s ranking in the ‘Ease of Doing Business
for Settlement of Investment Disputes (ICSID), an Index’ is sometimes seen in the news. Which of
entity that provides arbitration on international the following has declared that ranking? [2016]
investment disputes. (a) Organisation for Economic Cooperation and
▪ The bank predominantly acts as an organization Development (OECD)
that attempts to fight poverty by offering (b) World Economic Forum
developmental assistance to middle- and low- (c) World Bank
income countries. (d) World Trade Organisation
▪ Currently, the World Bank has two stated goals Answer: C
that it aims to achieve by 2030. The first is to end
extreme poverty by decreasing the number of
INTERNATIONAL MONETARY FUND
people living on less than $1.90 a day to below

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▪ The IMF was originally created in 1945 as part of
the Bretton Woods Agreement, which
attempted to encourage international financial
cooperation by introducing a system of
convertible currencies at fixed exchange rates,
with the dollar redeemable for gold at $35 per
ounce. The IMF oversaw this system: for
example, a country was free to readjust its
exchange rate by up to 10% in either direction,
but larger changes required the IMF's
permission.
▪ The IMF also acted as a gatekeeper: Countries
were not eligible for membership in the
International Bank for Reconstruction and
Development (IBRD)—a World Bank forerunner
that the Bretton Woods agreement created in
order to fund the reconstruction of Europe after
World War II—unless they were members of the
IMF.
▪ Since the Bretton Woods system collapsed in the
1970s, the IMF has promoted the system of
floating exchange rates, meaning that market
forces determine the value of currencies relative
to one another. This system continues to be in
place today.
▪ The International Monetary Fund (IMF) is based
in Washington, D.C., and currently consists of
189 member countries, each of which has
representation on the IMF's executive board in
proportion to its financial importance, so that
the most powerful countries in the global
economy have the most voting power.
▪ The IMF describes its mission as "to foster global
monetary cooperation, secure financial stability,
facilitate international trade, promote high
employment and sustainable economic growth,
and reduce poverty around the world."
▪ The IMF collects massive amounts of data on
national economies, international trade, and the
global economy in aggregate, as well as providing
regularly updated economic forecasts at the
national and international levels. These
forecasts, published in the World Economic
Outlook, are accompanied by lengthy discussions
of the effect of fiscal, monetary, and trade
policies on growth prospects and financial
stability.
▪ The IMF provides technical assistance, training,
and policy advice to member countries through
its capacity building programs. These programs
include training in data collection and analysis,
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which feed into the IMF's project of monitoring
national and global economies.
▪ The IMF makes loans to countries that are
experiencing economic distress in order to
prevent or mitigate financial crises. Members
contribute the funds for this lending to a pool
based on a quota system. These funds total
around SDR 475 billion (U.S. $645 billion) as of
September 2017. (IMF assets are denominated in
special drawing rights or SDR, a kind of quasi-
currency that is comprised of set proportions of
the world's reserve currencies.)
▪ IMF funds are often conditional on recipients
making reforms to increase their growth
potential and financial stability. Structural
adjustment programs, as these conditional loans
are known, have attracted criticism for
exacerbating poverty and reproducing the
structures of colonialism.
▪ Reports published by IMF
o Global Financial Stability Report
o World Economic Outlook
QUESTION 13
Q. ‘Global Financial Stability Report’ is prepared
by the [2016]
(a) European Central Bank
(b) International Monetary Fund
(c) International Bank for Reconstruction and
Development
(d) Organisation for Economic Cooperation and
Development
Answer: B
INTERNATIONAL MONETARY AND
FINANCIAL COMMITTEE
▪ The IMFC advises and reports to the IMF Board
of Governors on the supervision and
management of the international monetary and
financial system, including on responses to
unfolding events that may disrupt the system.
▪ Although the IMFC has no formal decision-
making powers, in practice, it has become a key
instrument for providing strategic direction to
the work and policies of the Fund.
▪ The IMFC usually meets twice a year, at the Bank-
Fund Annual and Spring Meetings .
▪ The size and the composition of the IMFC mirrors
that of the Executive Board. The IMFC has 24
members who are central bank governors,
 ministers, or others of comparable rank and who
are usually drawn from the governors of the
Fund’s 189 member countries. Each member
country and each group of member countries
that elects an Executive Director appoints a
member of the IMFC.
▪ The IMFC operates by consensus, including on
the selection of its chairman. While there are no
formal rules on term limits, since 2007 IMFC
chairmen have been appointed for a term of
three years.
▪ A number of international institutions, including
the World Bank, participate as observers in the
IMFC’s meetings.
QUESTION 14
Q. With reference to the International Monetary
and Financial Committee (IMFC), consider the
following statements: [2016]
1. IMFC discusses matters of concern affecting the
global economy, and advises the International
Monetary Fund (IMF) on the direction of its work.
2. The World Bank participates as observer in
IMFC’s meetings.
Which of the statements given above is/are
correct?
(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) Neither 1 nor 2
Answer: C
ASIAN DEVELOPMENT BANK
▪ Founded in 1966, the Asian Development Bank's
(ADB) headquarters are in Manila, Philippines.
The Asian Development Bank's primary mission
is to foster growth and cooperation among
countries in the Asia-Pacific Region.
▪ It has been responsible for a number of major
projects in the region and raises capital through
the international bond markets. The ADB also
relies on member contributions, retained
earnings from lending, and the repayment of
loans for funding of the organization.
▪ ADB provides assistance to its developing
member countries, the private sector, and
public-private partnerships through grants,
loans, technical assistance, and equity
investments to promote development. The ADB
regularly facilitates policy dialogues and provides
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advisory services. They also use co-financing
operations that tap a number of official,
commercial, and export credit sources while
providing assistance.
▪ Japan holds the largest proportion of shares in
ADB followed by the USA. Although the majority
of the Bank's members are from the Asia-Pacific
region, the industrialized nations are also well-
represented. ADB now has 67 members, of which
48 are from within Asia and the Pacific and 19
outside.
▪ India was a founding member of ADB in 1966 and
is now the bank’s fourth-largest shareholder and
top borrower. ADB commenced operations in
India in 1986 and has since committed 229
sovereign loans totaling $38.9 billion.
▪ Report published by ADB: Asian Development
Outlook.
ASIAN INFRASTRUCTURE
INVESTMENT BANK
▪ The Asian Infrastructure Investment Bank (AIIB)
is a new international development bank that
provides financing for infrastructure projects in
Asia.
▪ AIIB is a multilateral development bank
headquartered in Beijing. Like other
development banks, its mission is to improve
social and economic outcomes in its region, Asia,
and beyond. The bank opened in January 2016
and now has close to 100 members worldwide.
▪ Membership in the AIIB is open to all members
of the World Bank or the Asian Development
Bank and is divided into regional and non-
regional members. Regional members are those
located within areas classified as Asia and
Oceania by the United Nations.
▪ Unlike other MDBs (multilateral development
bank), the AIIB allows for non-sovereign entities
to apply for AIIB membership, assuming their
home country is a member. Thus, sovereign
wealth funds (such as the China Investment
Corporation) or state-owned enterprises of
member countries could potentially join the
Bank.
▪ China's leader Xi Jinping first proposed an Asian
infrastructure bank at an APEC summit in Bali in
2013. Many observers have interpreted the bank
as a challenge to international lending bodies,
which some consider too reflective of American
foreign policy interests such as the International
 Monetary Fund (IMF), the World Bank and the
Asian Development Bank.
▪ China is the largest shareholder with 26.61 %
voting shares in the bank followed by India
(7.6%), Russia (6.01%) and Germany (4.2 %). The
regional members hold 75% of the total voting
power in the Bank.
▪ China is the largest contributor to the Bank,
contributing USD 50 billion, half of the initial
subscribed capital. India is the second-largest
shareholder, contributing USD 8.4 billion.
▪ The bank is headed by a Board of Governors
composed of one Governor and one Alternate
Governor appointed by each of the member
countries. Governors and Alternate Governors
serve at the pleasure of the appointing member.
All the powers of the AIIB are vested in the Board
of Governors.
▪ The Board of Directors are composed of twelve
members who shall not be members of the
Board of Governors, and of whom: nine are
elected by the Governors representing regional
members; and three are elected by the
Governors representing non-regional members.
▪ The bank staff is headed by a President who is
elected by AIIB shareholders for a five-year term
and is eligible for re-election once.
▪ The bank's priorities are projects that promote
sustainable Infrastructure and to support
countries that are striving to meet
environmental and development goals.
▪ The Bank can lend outside Asia provided that it
supports connectivity with Asia or it is for a global
public good and that the loan significantly
benefits Asia. The ceiling for non-regional loans
is 25%.
▪ The AIIB has signed a co-financing framework
agreement with the World Bank. About two-
thirds of the loans approved by the bank have
been co-financed with other multilateral lending
institutions, including the World Bank and the
ADB.
▪ An example of an AIIB project is a rural road
connectivity initiative that will benefit
approximately 1.5 million rural residents in
Madhya Pradesh, India. In April 2018, the AIIB
announced the project, which is also expected to
improve the livelihoods, education, and mobility
of the residents of 5,640 villages. The project is a
U.S. $140-million jointly financed by the AIIB and
the World Bank.
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QUESTION 15
Q. With reference to Asian Infrastructure
Investment Bank (AIIB), consider the following
statements: [2019]
1. AIIB has more than 80 member nations.
2. India is the largest shareholder in AIIB.
3. AIIB does not have any members from outside
Asia.
Which of the statements given above is/are
correct?
(a) 1 only
(b) 2 and 3 only
(c) 1 and 3 only
(d) 1, 2 and 3
Answer: A
NEW DEVELOPMENT BANK
▪ At the fourth BRICS Summit in New Delhi (2012),
the leaders of Brazil, Russia, India, China and
South Africa first proposed the possibility of
setting up a New Development Bank to mobilize
resources of infrastructure and sustainable
projects in BRICS and other emerging countries
and developing countries.
▪ At the fifth BRICS Summit in Durban (2013), the
leaders of BRICS countries agreed on establishing
NDB. It was also decided that the initial
contribution to the bank should be used to
finance infrastructure in BRICS.
▪ At the sixth BRICS Summit in Fortaleza (2014),
the leaders of BRICS signed the agreement to
establish NDB. In the Fortaleza declaration, the
leaders stressed that the NDB would strengthen
cooperation among BRICS and will supplement
the efforts of other global multilateral
institutions like World Bank for global
development and collectively work for achieving
the goal of strong, sustainable and balanced
growth.
▪ The Fortaleza Declaration further said: “The Bank
shall have an initial authorized capital of US$ 100
billion. The initial subscribed capital shall be US$
50 billion, equally shared among founding
members. The first chair of the Board of
Governors shall be from Russia. The first chair of
the Board of Directors shall be from Brazil. The
first President of the Bank shall be from India.
The headquarters of the Bank shall be located in
Shanghai. The New Development Bank Africa
 Regional Centre shall be established in South
Africa concurrently with the headquarters.”
▪ Bank’s Articles of Agreement specify that all
members of the United Nations could be
members of the bank, however the share of the
BRICS nations can never be less than 55% of
voting power.
▪ The voting power of each member shall equal its
subscribed shares in the capital stock of the
Bank.
▪ NDB’s key areas of operation are clean energy,
transport infrastructure, irrigation, sustainable
urban development and economic cooperation
among the member countries.
QUESTION 16
Q. Consider the following statements: [2016]
1. New Development Bank has been setup by
APEC
2. The headquarters of New Development Bank is
in Shanghai.
Which of the statements given above is/are
correct?
(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) Neither 1 nor 2
Answer: B
WORLD TRADE ORGANISATION
▪ The WTO was born out of the General
Agreement on Tariffs and Trade (GATT), which
was established in 1947. GATT was part of the
Bretton Woods-inspired family, including the
International Monetary Fund (IMF) and World
Bank. A series of trade negotiations, GATT
rounds began at the end of World War II and
were aimed at reducing tariffs for the facilitation
of global trade.
▪ The rationale for GATT was based on the most
favored nation (MFN) clause, which, when
assigned to one country by another, gives the
selected country privileged trading rights. As
such, GATT aimed to help all countries obtain
MFN-like status so no single country would hold
a trading advantage over others.
▪ The WTO replaced GATT as the world's global
trading body in 1995, and the current set of
governing rules stems from the Uruguay Round
of GATT negotiations, which took place from
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1986 to 1994. GATT trading regulations
established between 1947 and 1994 (and in
particular those negotiated during the Uruguay
Round) remain the primary rule book for
multilateral trade in goods.
▪ The Uruguay Round also laid the foundations for
regulating trade in services. The General
Agreement on Trade in Services (GATS) is the
guideline directing multilateral trade in services.
Intellectual property rights were addressed in
the establishment of regulations protecting the
trade and investment of ideas, concepts, designs,
patents and so forth.
▪ The purpose of the WTO is to ensure global trade
commences smoothly, freely and predictably.
The WTO creates and embodies the ground rules
for global trade among member nations, offering
a system for international commerce.
▪ The WTO aims to create economic peace and
stability in the world through a multilateral
system based on consenting member states (in
2017 there were 164 members) that have
ratified the rules of the WTO in their individual
countries as well. This means WTO rules become
part of a country's domestic legal system. The
rules thus apply to local companies conducting
business in the international arena.
▪ Decisions are made by consensus, though a
majority vote may also rule (this is very rare).
Based in Geneva, Switzerland, the Ministerial
Committee, which holds meetings at least every
two years, makes the top decisions.
▪ There is also a goods council, services council,
and intellectual property rights council, which all
report to a general council, in addition to many
working groups and committees.
▪ If a trade dispute occurs, the WTO works to
resolve it. If for example, a country erects a trade
barrier in the form of a customs duty against a
particular country or a particular good, the WTO
may issue trade sanctions against the violating
country. The WTO will also work to resolve the
conflict through negotiations.
▪ Although the WTO is not a UN specialized
agency, it has maintained strong relations with
the UN and its agencies since its establishment.
The WTO-UN relations are governed by the
“Arrangements for Effective Cooperation with
other Intergovernmental Organizations-
Relations between the WTO and the United
Nations” signed on 15 November 1995.
GEOGRAPHICAL INDICATIONS

▪ Geographical Indications of Goods are defined as
that aspect of industrial property which refer to
the geographical indication referring to a country
or to a place situated therein as being the
country or place of origin of that product.
Typically, such a name conveys an assurance of
quality and distinctiveness which is essentially
attributable to the fact of its origin in that
defined geographical locality, region or country.
▪ Under Articles 1 (2) and 10 of the Paris
Convention for the Protection of Industrial
Property, geographical indications are covered
as an element of IPRs.
▪ They are also covered under Articles 22 to 24 of
the Trade Related Aspects of Intellectual
Property Rights (TRIPS) Agreement, which was
part of the Agreements concluding the Uruguay
Round of GATT negotiations.
▪ India, as a member of the World Trade
Organization (WTO), enacted the Geographical
Indications of Goods (Registration & Protection)
Act, 1999 has come into force with effect from
15th September 2003.
QUESTION 17
Q. India enacted Geographical Indications of
Goods (Registration and Protection) Act, 1999 in
order to comply with the obligations to [2018]
(a) ILO
(b) IMF
(c) UNCTAD
(d) WTO
Answer: D
DOMESTIC SUPPORT: AMBER, BLUE AND
GREEN BOXES
▪ In WTO terminology, subsidies in general are
identified by “boxes” which are given the colours
of traffic lights: green (permitted), amber (slow
down — i.e. need to be reduced), red
(forbidden). In agriculture, things are, as usual,
more complicated.
▪ The Agriculture Agreement has no red box,
although domestic support exceeding the
reduction commitment levels in the amber box is
prohibited; and there is a blue box for subsidies
that are tied to programmes that limit
production.
▪ Amber Box: Nearly all domestic support
measures considered to distort production and
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trade (with some exceptions) fall into the amber
box, which is defined in Article 6 of the
Agriculture Agreement as all domestic supports
except those in the blue and green boxes. These
include measures to support prices, or subsidies
directly related to production quantities. These
supports are subject to limits: “de minimis”
minimal supports are allowed (generally 5% of
agricultural production for developed countries,
10% for developing countries). The reduction
commitments are expressed in terms of a “Total
Aggregate Measurement of Support” (Total
AMS)
▪ Green Box: The green box is defined in Annex 2
of the Agriculture Agreement. In order to qualify,
green box subsidies must not distort trade, or at
most cause minimal distortion (paragraph 1).
They have to be government-funded (not by
charging consumers higher prices) and must not
involve price support. They tend to be
programmes that are not targeted at particular
products, and include direct income supports for
farmers that are not related to (are “decoupled”
from) current production levels or prices. They
also include environmental protection and
regional development programmes. “Green box”
subsidies are therefore allowed without limits.
QUESTION 18
Q. In the context of which of the following do you
sometimes find the terms ‘amber box, blue box
and green box’ in the news? [2016]
(a) WTO affairs
(b) SAARC affairs
(c) UNFCCC affairs
(d) India – EU negotiations on FTA
Answer: A
WORLD ECONOMIC FORUM
▪ The World Economic Forum is the International
Organization for Public-Private Cooperation.
▪ The World Economic Forum’s membership
features a cross section of representatives from
the private and public sector, and includes some
of the most prominent CEOs, ambassadors,
public figures, media personnel, government
officials, religious leaders and union
representatives from around the world.
▪ Founded in 1971 in Geneva, the current World
Economic Forum has a mission based on what is
known as stakeholder theory. Stakeholder
theory offers a proposal that while a private
sector entity’s role is to increase profits for its
shareholders, it is contingent upon the
organization to view the rest of society as having
a stake in the company’s actions. Stakeholders
such as employees, customers the company
serves, and the local and global community are
to be considered in making key decisions.
▪ Headquartered in Switzerland, the World
Economic Forum also has offices in New York,
Beijing, and Tokyo, but in 2017 announced a new
office in San Francisco.
▪ The organization is funded through its own
membership, which includes industry leaders,
politicians, thinkers, and academics, as well as
celebrities and interested individuals.
▪ It brings together its membership on a yearly
basis in Davos, Switzerland to discuss major
issues concerning the world political economy.
These include but are not limited to issues of
politics, economics, social, and environmental
concerns.
▪ Reports published by WEF:
o Global Competitiveness Report
o Global Information Technology Report
o Global Gender Gap Report
o Global Risk Report
o Travel and Tourism Competitiveness Report
o Global Human Capital Index
o Migration and Its Impact on Cities

QUESTION 19
Q. Which of the following gives ‘Global Gender
Gap Index’ ranking to the countries of the world?
[2018]
(a) World Economic Forum
(b) UN Human Rights Council
(c) UN Women
(d) World Health Organisation
Answer: A

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 Q.5 Which of the following reports are published by World
MCQS FOR PRACTICE Economic Forum?
1. The Global Human Capital Index
2. The Global Gender Gap Report
Q.1 With reference to World Trade Organisation, 3. Migration and Its Impact on Cities
consider the following statements: 4. The Global Competitiveness Report
1. Its purpose is to ensure optimum utilisation of Choose the correct answer using codes given below
world resources and to protect the environment. (a) 1, 2 and 3 only
2. It aims to lessen the degree of disequilibrium in (b) 1, 2 and 4 only
the international balance of payments of its (c) 2, 3 and 4 only
(d) All of the above
members.
3. It strives to establish a rule-based trading regime
in which nations cannot place arbitrary
restrictions on trade.
Which of the statements given above are correct?
(a) 1 and 2 only
(b) 1 and 3 only
(c) 2 and 3 only
(d) 1, 2 and 3

Q.2 With reference to Financial Stability and Development

Council (FSDC), consider the following statements:
1. It aims to enhance inter-regulatory coordination among
financial sector regulatory authorities.
2. It will focus on financial literacy and financial inclusion.
3. It is chaired by the Finance Minister of India.
Which of the statements given above is/are correct?
(a) 1 only
(b) 1 and 2 only
(c) 2 and 3 only
(d) 1, 2 and 3

Q. 3 Consider the following statements about functions of

Securities and Exchange Board of India:
1. It regulates the business of the stock market and other
securities market.
2. It prohibits insider trading in securities market.
3. It promotes awareness among investors and training of
intermediaries about safety of market.
Which of the statement given above are correct?
(a) 1 and 2 only
(b) 2 and 3 only
(c) 1 and 3 only
(d) 1, 2 and 3

Q.4 With reference to International Monetary Fund (IMF),

consider the following statements:
1. It helps member nations correct any balance of
payments crisis.
2. The quota share of each nation is determined by the size
of the economy only.
Which of the statements given above is/are correct?
(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) Neither 1 nor 2

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MCQS WITH ANSWER &
EXPLANATION
Q.1 With reference to World Trade Organisation,
consider the following statements:
4. Its purpose is to ensure optimum utilisation of
world resources and to protect the environment.
5. It aims to lessen the degree of disequilibrium in
the international balance of payments of its
members.
6. It strives to establish a rule-based trading regime
in which nations cannot place arbitrary
restrictions on trade.
Which of the statements given above are correct?
(a) 1 and 2 only
(b) 1 and 3 only
(c) 2 and 3 only
(d) 1, 2 and 3
Answer: B
Explanation:
The WTO was founded in 1995 as the successor
organisation to the General Agreement on Trade and
Tariff (GATT). GATT was established in 1948 with 23
countries as the global trade organization to
administer all multilateral trade agreements by
providing equal opportunities to all countries in the
international market for trading purposes. WTO is
expected to establish a rule-based trading regime in
which nations cannot place arbitrary restrictions on
trade. In addition, its purpose is to enlarge
production and trade of services, to ensure optimum
utilisation of world resources and to protect the
environment. Hence, statements 1 and 3 are correct.
IMF aims to lessen the degree of disequilibrium in
the international balance of payments of members.
Hence, statement 2 is not correct.
Q.2 With reference to Financial Stability and Development
Council (FSDC), consider the following statements:
4. It aims to enhance inter-regulatory coordination among
financial sector regulatory authorities.
5. It will focus on financial literacy and financial inclusion.
6. It is chaired by the Finance Minister of India.
Which of the statements given above is/are correct?
(a) 1 only
(b) 1 and 2 only
(c) 2 and 3 only
(d) 1, 2 and 3
Answer: D
Explanation:
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In pursuance of the announcement made in the Union
Budget 2010-11 and with a view to strengthen and
institutionalize the mechanism for maintaining financial
stability and enhancing inter-regulatory coordination, Indian
Government has setup an apex-level Financial Stability and
Development Council (FSDC). Hence, statement 1 is correct.
It will focus on financial literacy and financial inclusion.
Hence, statement 2 is correct.
The Chairman of the FSDC is the Finance Minister of India
and its members include the heads of the financial sector
regulatory authorities (i.e, SEBI, IRDA, RBI, PFRDA), Finance
Secretary and/or Secretary, Department of Economic Affairs
(Ministry of Finance), Secretary, (Department of Financial
Services, Ministry of Finance) and the Chief Economic
Adviser. Hence, statement 3 is correct.
Q. 3 Consider the following statements about functions of
Securities and Exchange Board of India:
4. It regulates the business of the stock market and other
securities market.
5. It prohibits insider trading in securities market.
6. It promotes awareness among investors and training of
intermediaries about safety of market.
Which of the statement given above are correct?
(a) 1 and 2 only
(b) 2 and 3 only
(c) 1 and 3 only
(d) 1, 2 and 3
Answer: D
Explanation:
The Securities and Exchange Board of India (SEBI) was
established in 1988. It got a legal status in 1992. SEBI was
primarily set up to regulate the activities of the merchant
banks, to control the operations of mutual funds, to work as
a promoter of the stock exchange activities and to act as a
regulatory authority of new issue activities of companies.
The SEBI was set up with the fundamental objective, 'to
protect the interest of investors in securities market and for
matters connected therewith or incidental thereto.'
The main functions of SEBI are:-
1. To regulate the business of the stock market and other
securities market.
2. To promote and regulate the self regulatory
organizations.
3. To prohibit fraudulent and unfair trade practices in
securities market.
4. To promote awareness among investors and training of
intermediaries about safety of market.
5. To prohibit insider trading in securities market.
6. To regulate huge acquisition of shares and takeover of
companies.
Q.4 With reference to International Monetary Fund (IMF),
consider the following statements:
3. It helps member nations correct any balance of
payments crisis.
4. The quota share of each nation is determined by the size
of the economy only.
Which of the statements given above is/are correct?
(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) Neither 1 nor 2
Answer: A
The IMF, also known as the International Monetary Fund,
was conceived at a UN conference in Bretton Woods, New
Hampshire, United States, in July 1944. The 44 countries at
that conference sought to build a framework for economic
cooperation to avoid a repetition of the competitive
devaluations that had contributed to the Great Depression
of the 1930s.
The IMF‘s fundamental mission is to ensure the stability of
the international monetary system. It does so in three ways:
keeping track of the global economy and the economies of
member countries; lending to countries with balance of
payments difficulties; and giving practical help to members.
Hence, statement 1 is correct.
When a country joins the IMF, it is assigned an initial quota
in the same range as the quotas of existing members of
broadly comparable economic size and characteristics. A
member's quota determines that country‘s financial and
organizational relationship with the IMF including
subscriptions; access to financing and voting power.The IMF
uses a quota formula to help assess a member‘s relative
position.
Explanation:
Statement 1 is correct as The Global Human Capital Index
Report- published by World Economic Forum, ranks 130
countries on how well they are developing their human
capital on a scale from 0 (worst) to 100 (best) across four
thematic dimensions and five distinct age groups to capture
the full human capital potential profile of a country.
Statement 2 is correct as The Global Gender Gap Report is
published by WEF, benchmarks 144 countries on their
progress towards gender parity across four thematic
dimensions: Economic Participation and
Opportunity, Educational Attainment, Health and Survival,
and Political Empowerment.
Statement 3 is correct as Migration and Its Impact on Cities
report is published by WEF. The WEF has released this report
taking a deep dive on migration and cities, exploring the
types, causes and patterns of migration, the most affected
corridors and cities, the impact on urban infrastructure and
services, the solutions that can be employed and how cities
can seek to future proof themselves to address this growing
challenge.
Statement 4 is correct as The Global Competitiveness Report
is also published by WEF.

The current quota formula is a weighted average of GDP

(weight of 50 percent), openness (30 percent), economic
variability (15 percent), and international reserves (5
percent). For this purpose, GDP is measured through a blend
of GDP—based on market exchange rates (weight of 60
percent) and on PPP exchange rates (40 percent). The
formula also includes a ―compression factor‖ that reduces
the dispersion in calculated quota shares across members.
Hence, statement 2 is not correct.

Quotas are denominated in Special Drawing Rights (SDRs),

the IMF’s unit of account. The largest member of the IMF is
the United States, with a current quota (as of March 2017)
of SDR82.99 billion (about US$118 billion), and the smallest
member is Tuvalu, with a quota of SDR2.5 million (about
US$3.5 million).

Q.5 Which of the following reports are published by World

Economic Forum?
5. The Global Human Capital Index
6. The Global Gender Gap Report
7. Migration and Its Impact on Cities
8. The Global Competitiveness Report
Choose the correct answer using codes given below
(a) 1, 2 and 3 only
(b) 1, 2 and 4 only
(c) 2, 3 and 4 only
(d) All of the above
Answer: D
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